MAUMEE, Ohio, Aug. 3, 2016 /CNW/ -- The Andersons, Inc.
(NASDAQ: ANDE) announces financial results for the second-quarter
ended June 30, 2016.
- Company reports second quarter net income of $14.4 million, $0.51 per diluted share
- Grain Group pre-tax loss of $13
million, showing improvement over Q1
- Ethanol Group returned to profitability driven by strong
seasonal demand
- Plant Nutrient Group volumes grew year over year while
margins remained soft
- Rail Group pre-tax income of $6.6
million, down from prior year primarily due to the large
lease settlement recorded in second quarter of 2015
The Company reported net income attributable to The Andersons
Inc. of $14.4 million, or
$0.51 per diluted share on revenues
of $1.1 billion for the second
quarter of 2016 compared to net income of $31.1 million or $1.09 per diluted share on revenues of
$1.2 billion in the second quarter of
2015.
For the first six months of the year, the Company had a net loss
of $273,000, or $0.01 per diluted share compared to net income of
$35.2 million or $1.23 per diluted share during the same period
last year.
"The first half of the year was challenging, in line with our
expectations, due to the poor crop last fall in the Eastern Corn
Belt," said CEO Pat Bowe. "While
challenges in our Grain Group persisted, we did begin to see
positive impacts from a good wheat harvest, and are starting to
capture benefits from our productivity initiatives.
"We were encouraged to see good volumes of specialty products in
our Plant Nutrient business," he continued. "However, margins were
disappointing in the face of oversupply of basic nutrients and low
grain prices. The industry is starting to see production
curtailments in certain products which should help bring supply and
demand more into balance."
Second Quarter Segment Overview
Grain Group challenges persisted into the second
quarter
The Grain Group reported a pre-tax loss of $13.0 million compared to pre-tax income of
$3.1 million in the second quarter of
2015.
Grain Group Results
|
Second
Quarter
|
First Six
Months
|
$ in MM
|
'16
|
'15
|
V
PY
|
'16
|
'15
|
V
PY
|
Base
Grain
|
($9.8)
|
$(4.3)
|
($5.6)
|
$(23.1)
|
$(4.7)
|
$(18.4)
|
Grain
Affiliates
|
($3.2)
|
$7.4
|
($10.6)
|
$(7.3)
|
$8.6
|
$(15.9)
|
Grain
Group
|
($13.0)
|
$3.1
|
($16.2)
|
$(30.4)
|
$3.9
|
$(34.3)
|
The Group's Base Grain operations continued to feel the pressure
from both low carry and basis appreciation primarily due to the
poor crop in the Eastern Corn Belt in 2015.
Affiliate earnings were lower due to losses in the Lansing Trade
Group (LTG) while performance at Thompsons Limited remained
steady. DDGS markets returned towards normal conditions
during the quarter for LTG, however they were adversely impacted by
trading positions during the quarter.
As previously announced during the quarter, the Company
completed the sale of eight grain and agronomy locations in
Western Iowa to MaxYield
Cooperative of West Bend,
Iowa. This transaction closed on May 1, 2016, and resulted in a nominal
gain.
Ethanol Group rebounded
The Group returned to profitability in the second quarter and
for the full first half of the year. Ethanol margins grew in the
second quarter on the seasonal increase in demand from the summer
driving season and steady export volumes.
Ethanol pre-tax income for the second quarter came in at
$6.2 million, compared to the
$9.7 million earned in the same
quarter of 2015. This brings the year to date results back to
positive income with the first six months generating $3.5 million compared to $14.9 million in the same period last year.
Factors impacting second quarter performance included:
- U.S. gasoline demand tracked above five year averages,
strengthening as the driving season got into full gear.
- Margins were volatile during the quarter as corn prices moved
lower and fuel prices continued to fluctuate.
- Industry production levels were at high levels throughout the
quarter at times pressuring margins.
The Group's assets continue to perform well, achieving a new
high for production versus comparable second quarters in prior
years. The Albion, Michigan
ethanol facility expansion remains on schedule for startup in the
spring of 2017.
Plant Nutrient Group
Pre-tax income for the Group was $23.5
million, up from $18.9 million
in same period last year. Nutrient volumes and margins continued to
be negatively impacted by depressed grain prices and softening
prices.
Plant Nutrient Group Results
|
Second
Quarter
|
First Six
Months
|
$ in MM, Tons in
000's
|
'16
|
'15
|
V
PY
|
'16
|
'15
|
V
PY
|
Basic
Nutrients (Tons)
|
549
|
537
|
12
|
2%
|
761
|
716
|
45
|
6%
|
Specialty
Nutrients (Tons)
|
208
|
129
|
79
|
62%
|
327
|
216
|
110
|
51%
|
Other
(Tons)
|
185
|
237
|
(52)
|
(22%)
|
314
|
363
|
(50)
|
(14%)
|
Total
volume
|
942
|
903
|
39
|
4%
|
1,401
|
1,296
|
105
|
8%
|
Pre-Tax
Income
|
$23.5
|
$18.9
|
$4.3
|
23%
|
$25.2
|
$19.3
|
$5.9
|
31%
|
|
|
|
|
|
|
|
|
|
|
Basic nutrient volumes were up modestly in the second quarter
with the increase from acquired locations partially offset by
intensified competitive pressures fueled by oversupply throughout
the channel. Specialty nutrient volumes were up 62 percent
year over year, driven by added sales of Nutra-Flo products.
Volumes in the other category continued to track lower compared to
prior year.
Rail Group
The Rail Group earned $6.6 million
in the quarter, down from the prior year primarily due to an
unusually large, $10.6 million
pre-tax, gain on the settlement of an early lease termination in
the prior year.
Rail Group Results
|
Second
Quarter
|
First Six
Months
|
$ in MM
|
'16
|
'15
|
V
PY
|
1H
'16
|
1H
'15
|
V
PY
|
Base Lease Income
|
$2.7
|
$15.6
|
$(12.9)
|
$7.0
|
$20.6
|
$(13.6)
|
Fleet Utilization Rate
|
88.6%
|
93.5%
|
(4.9%)
|
90.0%
|
92.7%
|
(2.7%)
|
Car Sale Income
|
$2.3
|
$4.7
|
$(2.4)
|
$4.7
|
$9.2
|
$(4.5)
|
Rail Services & Other
|
$1.6
|
$1.4
|
$0.2
|
$4.2
|
$2.2
|
$2.0
|
Rail Group Pre-Tax
Income
|
$6.6
|
$21.7
|
$(15.1)
|
$15.9
|
$32.0
|
$(16.1)
|
Equipment utilization rates averaged 88.6 percent in the second
quarter compared to 93.5 percent in the second quarter of last
year. Average lease rates were slightly down compared to the
same period of 2015, while costs of sales were higher due to
increased storage cost partially offset by lower maintenance
expenses year over year.
Railcar sales generated $2.3
million of pre-tax income in the second quarter compared to
$4.7 million in the second quarter of
2015. While part of the normal portfolio management process, the
timing of these transactions normally vary quarter to quarter and
year to year depending on rail market and financing conditions.
Rail Services and Other pre-tax income was $1.6 million in the second quarter, up from
$1.4 million in the same quarter in
2015, driven by improved performance in the railcar repair business
partially offset by the elimination of income from an investment in
a short line railroad which was redeemed earlier this year.
Retail
The Retail Group had pre-tax income of $1.0 million for the second quarter compared to
income of $1.5 million in the same
period last year. Performance in the second quarter was lower
compared to the same period of 2015 due to the timing of Easter
which occurred in March rather than April, and lower same store
sales through the quarter.
Corporate
Unallocated Corporate level expenses for the second quarter of
2016 were $2.2 million compared to
expenses of $5.8 million in the
second quarter of 2015. Corporate expense was lower primarily due
to lower incentive compensation accruals and the impact of cost
reduction measures.
Conference Call
The Company will host a webcast on Thursday, August 4, 2016
at 11:00 A.M. ET, to discuss its
performance and provide outlook for 2016. To dial-in to the
call, the number is 866-439-8514 or 678-509-7568 (participant
passcode is 49515341). It is recommended that you call 10
minutes before the conference call begins.
To access the webcast:
a. Click on the link:
http://edge.media-server.com/m/p/by3ndtra
b. Log on.
c. Click on the phone icon at the bottom of the "webcast window" on
the left side of the screen. Then, you will be provided with
the conference call number and passcode.
d. Click the gear set icon (left of the telephone icon) and select
'Live Phone' to synchronize the presentation with the audio on your
phone.
A replay of the call can also be accessed under the heading
"Investor" on the Company website at
www.andersonsinc.com.
Forward Looking Statements
This release contains forward-looking statements. These
statements involve risks and uncertainties that could cause actual
results to differ materially. Without limitation, these risks
include economic, weather and regulatory conditions, competition,
and the risk factors set forth from time to time in the Company's
filings with the Securities and Exchange Commission. Although
the Company believes that the assumptions upon which the financial
information and its forward-looking statements are based are
reasonable, it can give no assurance that these assumptions will
prove to be correct.
Company Description
Founded in Maumee, Ohio, in
1947, The Andersons is a diversified Company rooted in agriculture
conducting business across North
America in the grain, ethanol, plant nutrient and rail
sectors. The Company also has a consumer retailing presence. For
more information, visit The Andersons online at
www.andersonsinc.com.
The Andersons,
Inc.
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
(in thousands, except
per share data)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Sales and
merchandising revenues (a)
|
$
1,064,244
|
|
$
1,187,704
|
|
$
1,952,123
|
|
$
2,105,929
|
Cost of sales and
merchandising revenues
|
967,202
|
|
1,079,531
|
|
1,787,326
|
|
1,914,445
|
Gross
profit
|
97,042
|
|
108,173
|
|
164,797
|
|
191,484
|
Operating,
administrative and general expenses
|
75,405
|
|
83,743
|
|
155,286
|
|
162,346
|
Interest
expense
|
6,554
|
|
4,025
|
|
13,605
|
|
10,063
|
Other
income:
|
|
|
|
|
|
|
|
Equity in earnings of
affiliates
|
2,344
|
|
16,190
|
|
(4,633)
|
|
19,450
|
Other income,
net
|
5,682
|
|
13,772
|
|
8,928
|
|
16,880
|
Income (loss) before
income taxes
|
23,109
|
|
50,367
|
|
201
|
|
55,405
|
Income tax provision
(benefit)
|
7,668
|
|
17,969
|
|
382
|
|
19,061
|
Net income
(loss)
|
15,441
|
|
32,398
|
|
(181)
|
|
36,344
|
Net loss attributable
to the noncontrolling interests
|
1,018
|
|
1,306
|
|
92
|
|
1,155
|
Net income (loss)
attributable to The Andersons, Inc.
|
$
14,423
|
|
$
31,092
|
|
$
(273)
|
|
$
35,189
|
|
|
|
|
|
|
|
|
Per common
share:
|
|
|
|
|
|
|
|
Basic earnings
attributable to The Andersons, Inc. common shareholders
|
$
0.51
|
|
$
1.09
|
|
$
(0.01)
|
|
$
1.23
|
Diluted earnings
attributable to The Andersons, Inc. common shareholders
|
$
0.51
|
|
$
1.09
|
|
$
(0.01)
|
|
$
1.23
|
Dividends
declared
|
$
0.155
|
|
$
0.14
|
|
$
0.310
|
|
$
0.28
|
(a) Revenue and
cost of sales in the interim periods of 2015 have been recast to
reflect a change in policy related to the classification of gains
and losses on derivative contracts as disclosed in the 2015
10-K.
|
The Andersons,
Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
June 30,
2016
|
|
December 31,
2015
|
|
June 30,
2015
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
31,383
|
|
$
63,750
|
|
$
40,773
|
Restricted
cash
|
987
|
|
451
|
|
941
|
Accounts receivable,
net
|
212,588
|
|
170,912
|
|
238,601
|
Inventories
|
486,236
|
|
747,399
|
|
508,408
|
Commodity derivative
assets – current
|
115,924
|
|
49,826
|
|
39,860
|
Deferred income
taxes
|
-
|
|
6,772
|
|
6,069
|
Other current
assets
|
48,754
|
|
90,412
|
|
44,765
|
Total current
assets
|
895,872
|
|
1,129,522
|
|
879,417
|
Other
assets:
|
|
|
|
|
|
Commodity derivative
assets – noncurrent
|
1,934
|
|
412
|
|
2,990
|
Other assets, net
(a)
|
183,728
|
|
193,689
|
|
277,672
|
Equity method
investments
|
238,478
|
|
242,107
|
|
224,380
|
|
424,140
|
|
436,208
|
|
505,042
|
Rail Group assets
leased to others, net
|
340,136
|
|
338,111
|
|
330,832
|
Property, plant and
equipment, net (a)
|
447,267
|
|
455,260
|
|
437,074
|
Total
assets
|
$
2,107,415
|
|
$
2,359,101
|
|
$
2,152,365
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Short-term
debt
|
$
179,404
|
|
$
16,990
|
|
$
141,250
|
Trade and other
payables
|
302,413
|
|
668,788
|
|
358,190
|
Customer prepayments
and deferred revenue
|
18,252
|
|
66,762
|
|
25,927
|
Commodity derivative
liabilities – current
|
43,183
|
|
37,387
|
|
42,622
|
Accrued expenses and
other current liabilities
|
71,169
|
|
70,324
|
|
72,034
|
Current maturities of
long-term debt
|
53,720
|
|
27,786
|
|
27,188
|
Total current
liabilities
|
668,141
|
|
888,037
|
|
667,211
|
|
|
|
|
|
|
Other long-term
liabilities
|
30,430
|
|
18,176
|
|
14,934
|
Commodity derivative
liabilities – noncurrent
|
2,182
|
|
1,063
|
|
2,177
|
Employee benefit plan
obligations
|
44,902
|
|
45,805
|
|
57,686
|
Long-term debt, less
current maturities
|
398,746
|
|
436,208
|
|
417,279
|
Deferred income
taxes
|
179,911
|
|
186,073
|
|
171,163
|
Total
liabilities
|
1,324,312
|
|
1,575,362
|
|
1,330,450
|
Total
equity
|
783,103
|
|
783,739
|
|
821,915
|
Total liabilities and
equity
|
$
2,107,415
|
|
$
2,359,101
|
|
$
2,152,365
|
(a) For the period
ended June 30, 2015 Other assets, net and Property, plant and
equipment, net have been recast to reflect the change in accounting
policy which reclassified software and accumulated
amortization. Additional detail is available in the 2015
10-K.
|
The Andersons,
Inc.
|
Segment
Data
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
Grain
|
|
Ethanol
|
|
Plant
Nutrient
|
|
Rail
|
|
Retail
|
|
Other
|
|
Total
|
Three months ended
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from
external customers
|
$
522,989
|
|
$142,520
|
|
$
320,036
|
|
$40,342
|
|
$38,357
|
|
$—
|
|
$1,064,244
|
Gross
profit
|
17,551
|
|
4,570
|
|
49,577
|
|
13,602
|
|
11,742
|
|
—
|
|
97,042
|
Equity in earnings of
affiliates
|
(2,907)
|
|
5,251
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,344
|
Other income,
net
|
2,642
|
|
3
|
|
1,222
|
|
185
|
|
91
|
|
1,539
|
|
5,682
|
Income (loss) before
income taxes
|
(13,037)
|
|
7,205
|
|
23,535
|
|
6,569
|
|
1,010
|
|
(2,173)
|
|
23,109
|
Loss attributable to
the noncontrolling interests
|
—
|
|
1,018
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,018
|
Income (loss) before
income taxes attributable to The Andersons, Inc. (a)
|
$
(13,037)
|
|
$
6,187
|
|
$
23,535
|
|
$
6,569
|
|
$
1,010
|
|
$
(2,173)
|
|
$
22,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Three months ended
June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Revenues from
external customers (b)
|
$
601,397
|
|
$
142,564
|
|
$
357,186
|
|
$
45,523
|
|
$
41,034
|
|
$
—
|
|
$
1,187,704
|
Gross
profit
|
25,005
|
|
5,843
|
|
46,698
|
|
18,249
|
|
12,378
|
|
—
|
|
108,173
|
Equity in earnings of
affiliates
|
7,875
|
|
8,315
|
|
—
|
|
—
|
|
—
|
|
—
|
|
16,190
|
Other income,
net
|
1,230
|
|
6
|
|
459
|
|
11,834
|
|
94
|
|
149
|
|
13,772
|
Income (loss) before
income taxes
|
3,147
|
|
10,975
|
|
18,873
|
|
21,689
|
|
1,469
|
|
(5,786)
|
|
50,367
|
Loss attributable to
the noncontrolling interest
|
(2)
|
|
1,308
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,306
|
Income (loss) before
income taxes attributable to The Andersons, Inc. (a)
|
$
3,149
|
|
$
9,667
|
|
$
18,873
|
|
$
21,689
|
|
$
1,469
|
|
$
(5,786)
|
|
$
49,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grain
|
|
Ethanol
|
|
Plant
Nutrient
|
|
Rail
|
|
Retail
|
|
Other
|
|
Total
|
Six months ended
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from
external customers
|
$1,061,803
|
|
$257,213
|
|
$
487,027
|
|
$79,951
|
|
$66,129
|
|
$—
|
|
$1,952,123
|
Gross
profit
|
33,751
|
|
6,906
|
|
76,266
|
|
28,162
|
|
19,712
|
|
—
|
|
164,797
|
Equity in earnings of
affiliates
|
(6,674)
|
|
2,041
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(4,633)
|
Other income,
net
|
3,310
|
|
33
|
|
2,017
|
|
1,562
|
|
180
|
|
1,826
|
|
8,928
|
Income (loss) before
income taxes
|
(30,445)
|
|
3,602
|
|
25,239
|
|
15,944
|
|
(1,066)
|
|
(13,073)
|
|
201
|
Income (loss)
attributable to the noncontrolling interests
|
(3)
|
|
95
|
|
—
|
|
—
|
|
—
|
|
—
|
|
92
|
Income (loss) before
income taxes attributable to The Andersons, Inc. (a)
|
$
(30,442)
|
|
$
3,507
|
|
$
25,239
|
|
$15,944
|
|
$
(1,066)
|
|
$
(13,073)
|
|
$
109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Six months ended
June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
Revenues from
external customers
|
$
1,160,073
|
|
$
275,365
|
|
$
511,137
|
|
$
89,739
|
|
$
69,615
|
|
$—
|
|
$
2,105,929
|
Gross
profit
|
54,730
|
|
12,129
|
|
68,664
|
|
35,571
|
|
20,390
|
|
—
|
|
191,484
|
Equity in earnings of
affiliates
|
9,423
|
|
10,027
|
|
—
|
|
—
|
|
—
|
|
—
|
|
19,450
|
Other income,
net
|
2,064
|
|
48
|
|
1,494
|
|
12,673
|
|
191
|
|
410
|
|
16,880
|
Income (loss) before
income taxes
|
3,887
|
|
16,106
|
|
19,297
|
|
32,002
|
|
(714)
|
|
(15,173)
|
|
55,405
|
Income (loss)
attributable to the noncontrolling interest
|
(5)
|
|
1,160
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,155
|
Income (loss) before
income taxes attributable to The Andersons, Inc. (a)
|
3,892
|
|
14,946
|
|
19,297
|
|
32,002
|
|
(714)
|
|
(15,173)
|
|
54,250
|
(a) Income (loss)
before income taxes attributable to The Andersons, Inc. for each
Group is defined as net sales and merchandising revenues plus
identifiable other income less all identifiable operating expenses,
including interest expense for carrying working capital and
long-term assets and is reported net of the noncontrolling interest
share of income (loss).
|
(b) Revenue in the
interim periods of 2015 has been recast to reflect a change in
policy related to the classification of gains and losses on
derivative contracts as disclosed in the 2015 10-K.
|
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SOURCE The Andersons, Inc.